Shareholders and operators in the Insurance Sector on Tuesday lauded the National Insurance Commission (NAICOM) for extending the deadline for the recapitalization of the Insurance and Reinsurance Companies, earlier fixed for June 30, 2020, to Dec. 31, 2020.
They spoke in separate interviews with the News Agency of Nigeria (NAN) in Lagos on Tuesday.
NAN reports that NAICOM had on Monday, in a circular with reference No: NAICOM/
DPR/CIR/25-03/2019 /DECEMBER 30,2019 signed by Mr Pius Agboola, Director, Policy, and Regulation, announced the extension of the deadline.
Agboola said that the decision for the extension followed a review of the recapitalization plans submitted by the operators and various levels of the compliance observed.
It also followed input from various engagements with relevant stakeholders.
In his reaction, Mr Boniface Okezie, National Coordinator, Progressive Shareholders Association of Nigeria, commended Mr Sunday Thomas, Acting Commissioner for Insurance, for ensuring the extension.
“There was no way the commission could stampede the insurance firms with the recapitalization, considering the warbling and unstable economy and the not clear policy by the Government.
`If the Acting Commissioner continues with this trend, then it will be better for the market; as there is no need to be too rigid because you are regulating, but rather consider the plight of the stakeholders, ” he said.
Okezie urged NAICOM to improve on its policy for the sector, for the insurance companies to take their rightful position in the capital market which would, in turn, make the re-capitalization seamless.
According to him, the effort, if made by NAICOM, will build the confidence of the public in the insurance sector.
“As a matter of concern, there is no will and confidence in the insurance sector.
“As of today, how many people patronize them? The share is lavishly below the power value.
“With the present reality, if there is going to be re-capitalization, at how much price would they offer their Right issue or Public offer to the public or existing investors who will buy?
“When you have not been reaping or getting appreciable dividends from the one you invested as an investor, how will you invest more? ” he asked.
Okezie, however, urged the Insurance and Reinsurance companies not to relax in their efforts and plans to meet up with the exercise despite the deadline extension.
He said that from information gathered, some of the insurance firms which had started the re-capitalisation in a bid to meet up with the initial deadline, might not be successful with their offer.
The shareholder advised that with the extension window, the Securities and Exchange Commission (SEC) should be proactive to extend the offer and even for those already in the market doing the Right issue.
Okezie, however, stated that based on the new development, there is a future for most of the insurance companies to still be in the control of the local investors, instead of the foreigners.
Also, Mr Valentine Ojumah, Managing Director, FBN Insurance, lauded NAICOM for its courage and listening ear, describing the development as a sign of better times ahead for the sector.
“I think the extension is good for the industry because operators now have more time to ensure they meet the minimum recapitalization requirements, ” Ojumah said.
According to him, it is in the best interest of the market to have more operators cross the deadline because it will increase local capacity and generally uplift the status of the industry.
Ojumah said that all stakeholders in the sector would benefit from strong insurance industry, as it would increase the capacity to innovate, employ very competent staff and train existing staff better.
He said that more viable insurance firms would also generate higher premium income, pay more taxes and contribute a more robust percentage to the nation’s Gross Domestic Product (GDP).
“In essence, I hope the extended time will be used judiciously to source the needed funds, ” he said.
Ojumah, however, said that the extension did not make any difference in the case of FBN Insurance, as it had enough funds to capitalize both the Life and General Insurance companies without asking its shareholders for new investment.
Mr Edwin Igbiti, Managing Director, Niger Insurance Plc, described the move by NAICOM as a good omen for the sector but warned operators
not to relent in their efforts to meet up with the exercise.
Igbiti said despite the challenges confronting the insurance company, it had not relented in its journey to meet up with the recapitalization deadline.
He said that the firm was considering about three to four options.
These, according to him, include serious combination with like-minds to marry, private placement which will be allowed by shares reconstruction and also rights issue.
“By January 2020, we will be on our toes, and all things being equal, I believe we will cross the odds, ” he said.
Also, Mrs Adetola Adegbayi, Executive Director, Leadway Assurance, said that the extension was not surprising.
She said that this was so, given that the industry clamored for it while commending the commission for the extension.
NAN reports that NAICOM, in exercise of its statutory powers and regulatory functions, had on May 20 reviewed the minimum paid-up share capital requirement for all classes of insurers, i.e Insurance, and Reinsurance companies.
The directive was with the exception of Takaful operators and Micro-insurance companies doing business in Nigeria.
Following the reviewed minimum capital requirement, the existing minimum paid-up capital share of the Life Insurance business was reviewed and raised from N2 billion to N8 billion.
General Insurance business was raised from N3 billion to N10 billion, Composite business was raised from N5 billion to N18 billion and Reinsurance was raised from N10billion to 20 billion.
The new paid-up share capital requirement took immediate effect for new applications made to NAICOM by companies seeking to carry on insurance business in Nigeria.
